Del Mar deal: Regional control for regional asset

Christine Kehoe & Pam Slater-Price

Last year, Gov. Arnold Schwarzenegger invited proposals to purchase the Del Mar Fairgrounds and Racetrack as a way of addressing the state’s chronic budget deficit. In August 2009, the city of Del Mar expressed interest in pursuing the purchase and began negotiations with the governor’s office, including five publicly noticed open council meetings to solicit input from the public.

A proposed agreement was reached several weeks ago to sell the property for $120 million, based in part on the governor’s requirement that the property must remain a racetrack and fairgrounds and existing labor agreements must be honored. A claim by the fair board president that the property is worth $1 billion confirms his interest in intense commercial development of the property, but is inconsistent with continuation of current uses of the site.

The fairgrounds and racetrack are threatened by a governing board pursuing massive commercial development of the property – a luxury hotel, convention center and sports complex – that would compromise public use of the facilities and harm the coastal lagoon and river valley.

Sale of the land to Del Mar, as permitted by Assembly Bill 181, would preserve existing facilities for public use and provide funding to upgrade them. The bill would create a nonprofit governing board of local residents with relevant experience. They would be appointed by local stakeholders, including the city of San Diego, San Diego County, Del Mar, Solana Beach and the San Dieguito River Valley Joint Powers Authority. This board would hire professional staff to administer the facility, just as the current fair board does. Unlike the current fair board, it would be accountable to San Diego County residents.

Another benefit to the region would be the partnership Del Mar has created with the thoroughbred racing industry. This industry is threatened throughout the state by the same kind of development pressures we’ve seen at the fairgrounds. Private investors will put up at least $30 million toward the sale price. They will then have a vested interest in committing millions more for upgrades at the racetrack that will make it the premiere racing facility on the West Coast, attract the Breeders’ Cup, and help ensure a healthy future for horse racing in California.

Critics at the fair board, anxious to protect their self-interest, have questioned Del Mar’s ability to accomplish a purchase of this magnitude. Yet Del Mar’s financial team includes nationally respected Wedbush Morgan Securities and bond counsel Orrick Herrington & Sutcliff. The proposed financing includes issuance of debt secured by fairgrounds and racetrack revenues, capital provided by private investors, and payments to be made to the state using operating revenues. Structured as an enterprise fund, no taxpayer dollars would be used.

The city and state have done extensive research into the financial performance of the current fairgrounds management, including a thorough review of its audited financial statements. The Assembly bill simply authorizes a sale, it does not mandate it. Like any prudent buyer, Del Mar will continue its due diligence. But the goal is to preserve this regional asset along our coast for enjoyment by future generations of San Diegans.

It’s time to protect the Del Mar Fairgrounds, make a solid financial deal and keep public lands in public hands.